Economic challenges for the forthcoming new year

The gratifying performance of the national economy in the outgoing year makes us upbeat about dreaming for much more in the forthcoming year. However, the economy of departing year also has left some challenges for 2017 to be met in order to smoothen the way to 2021, by which time we are aspiring for attaining Bangladesh the status of a middle-income country. Though economic performances are calculated on financial year basis, yet trying to see the ongoing calendar year for estimating new year will not be irrelevant.In 2016, GDP growth has crossed the 7 per cent mark. Rice production remained at the same level as in the last year. Government's production target of food grains, mainly rice and wheat, for FY 16 was 36.4 million metric tonnes has already been fulfilled and so far statistics we have. The crop sector has played a critically important role in ensuring food security and creating jobs. Notwithstanding a severe and increasing farmland constraint, Bangladesh has achieved self-sufficiency in rice production through a considerable increase in cropping intensity and technological progress. Cropping intensity increased from 177 per cent in FY 2005 to 190 per cent in the last FY. During this period, rice production rose by about 40 per cent, while production of other crops also experienced a rise. Here one dimension is being experienced and that is: the increasing costs of irrigation and agricultural labour coupled with higher returns from alternative crops are now discouraging farmers from remaining engaged in rice production. Fish production has grown at a healthy pace. The fisheries and animal farming (livestock and poultry) sub-sectors accounted for about 5.31 per cent of the GDP. Nearly 17.1 million people are involved in fish production, while animal farming has created job opportunities for around 6.5 million people. For around a decade or so, fish production in the country has been increasing to keep up with the growing demand at home and abroad. Bangladesh's annual demand for fish is about 4.1 million tonnes while production is around 3.85 million tonnes. By ensuring proper utilization of water bodies as well as using latest technologies the minimum gap is being covered.The country's poultry industry has achieved self-sufficiency in meeting local demand for meet and eggs. The industry is now producing 1,500 metric tonnes of poultry meat per day against the target of 1,400 metric tonnes.Industrial growth is estimated at 10.1 per cent in the last financial year driven by growth in large and medium scale manufacturing and construction. Double digit manufacturing growth is sustained. The manufacturing sub-sector has grown by 10.3 per cent in the last financial year. Large and medium scale industries have grown by 11.1 per cent. Squeezing traditional agriculture swap over by expanding manufacturing sectors is giving a positive message to the economy. Overall imports for the industrial sectors are growing about 6.5 per cent in dollar terms, mainly due to import of capital machinery which is growing by 14.1 per cent. Power plants, Padma Bridge construction, flyovers and balancing, modernization, rehabilitation and expansion of industrial units, garments and textiles in particular are spurring capital machinery imports. Political stability at home and decline in prices of capital machinery in international markets appear to have encouraged entrepreneurs to get into new ventures or expand their existing businesses. The construction sub-sector is performing better and growing at 8.9 per cent compared to 8.6 per cent in the previous year.As of June 30, 2016, total actual power generation during day peak hours was 7,800 megawatts (mw) per hour and during evening peak hours it was 9,036 mw. The demand was 8,408 mw. The maximum generation in 2016 so far has been 8,890 mw on September 8 and it was also the maximum generation in Bangladesh Power Development Board's (BPDB) history.Growth in the service sector increased from 5.8 per cent to 6.7 per cent in this year, largely reflecting an increase in the estimated value added in public administration, education and healthcare due to public sector wage increases. This argument we find in World Bank updates. Unlike domestic private investment, Foreign Direct Investment (FDI) increased significantly from $1.8 billion to $2 billion in the current financial year.During February-April 2016, the CPD conducted an entrepreneurs' survey on perceptions relating to the Bangladesh economy. Overall, they found improved perceptions about the business environment in 2016.Noted economist, Professor of Columbia University, USA, Jeffrey David Sachs expressed very optimistic view on the very go of our economy in a recently held seminar organized by DCCI in Hotel Radisson. To his view, the very place of Bangladesh in between two big economies China and India would bring her big opportunities. Bangladesh's strides in garments, pharmaceuticals, service sector, manufacturing and agricultural processing industries deserve high esteem. We also see the very turning of economic structure into a noted change that would take Bangladesh to the threshold of developed economy within two decades. Our transition to an industrial and services base from a traditional agriculture is praiseworthily caught in an evaluation of World Bank during 45 years after liberation. Of the seventies of the last century, the contribution of agriculture to GDP was 59.4 per cent. Contributions of industries and service sectors were 6 and 34 per cent respectively. Agriculture is now coming down to third position. It is a sign of a dynamic economy. Industry and service sectors are occupying the place of agriculture. Garments industry is taking over the place of jute industry. Per capita income now stands at $1465 from only $50 to 70. World Bank thinks a small scale of industrial revolution has taken place in the economy of Bangladesh. Immediately after independence, our development budget ranged up to 501 crore taka and 75 per cent that came from external sources. Now less than 30 per cent resources are coming from outside. So far internal resource mobilization is concerned, 70 per cent came from import duty. Now lion share is generated from income and all other direct taxes. Urbanization is rapidly expanding putting a positive impact on economy. Expanding electricity in rural and urban areas is transforming lives leading to modernity with a positive impact on socio-cultural and economic entities. 2016 saw an expansion of non-formal sectors in rural economy with its salutary effect on employment creation. This is in a nutshell the scenario of our economic achievements in 2016. Is there any message that 2016 has left for 2017? We have done very well. But there are many more things to be done in 2017. Lamp has its shadow, the moon has black spots. Our economy is still laden with naked disparity that is opposite to our liberation spirit. A small cohort of our population is controlling the lion portion of resources. Their life style defeats the life style of western rich people. They are controlling politics, social and cultural issues. We hope coming year would find out ways to address all these evils mentioned in our socio-political and economic lives.More to say, progress in easing the binding constraints on investment has been slow. Inadequate infrastructure, financial intermediation, bureaucratic inertia and corruption are continuing to hinder domestic as well as foreign investment. The lack of effective alternative dispute resolution mechanisms and slow judicial processes impede the enforcement of contracts and the resolution of business disputes.Development spending is still in slow lane. Oil price is again showing uptrend in international market. So inflation could further get a rising trend in 2017. Rising non-performing loans (NPLs) are undercutting banks' capital base. Sources say risky default loans stand at 54 thousand crore taka. 9.1 per cent educated youths are unemployed. In addition, 20 lakh of labour force are entering labour market every year. But desired level of private investments is not breaking shyness. These are some burning challenges to socio-economic fabrics to be faced in 2017. Are we ready for that?rHaradhan Ganguly is a freelance contributor and Secretary, United Nations Association of Bangladesh (UNAB) Email: gharadhan@gmail.com